Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Cadence Design Systems

(

CDNS

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cadence Design Systems as such a stock due to the following factors:

  • CDNS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.4 million.
  • CDNS has traded 166,718 shares today.
  • CDNS traded in a range 222.2% of the normal price range with a price range of $0.69.
  • CDNS traded above its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on CDNS:

Cadence Design Systems, Inc. CDNS has a PE ratio of 37. Currently there are 6 analysts that rate Cadence Design Systems a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Cadence Design Systems has been 3.8 million shares per day over the past 30 days. Cadence Design Systems has a market cap of $5.8 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.80 and a short float of 19.6% with 17.24 days to cover. Shares are up 4.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cadence Design Systems as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, reasonable valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.5%. Since the same quarter one year prior, revenues slightly increased by 8.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 9.6% when compared to the same quarter one year prior, going from $33.07 million to $36.26 million.
  • The gross profit margin for CADENCE DESIGN SYSTEMS INC is currently very high, coming in at 90.91%. It has increased from the same quarter the previous year.

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